By Roger E. A. Farmer
In August of 2010, I argued on this Forum that the Fed should expand its policy of quantitative easing. By now the US is well into a programme that, by the end of June 2011, will have added $600bn to the Fed’s balance sheet. There is widespread discussion of what to do next.
Was QE successful? The facts suggest yes. There are signs of a nascent recovery in the US. Unemployment has fallen for the fourth month in a row and the economy is adding more than 200,000 jobs a month. Not enough to bring unemployment down anytime soon, but it’s a start. Core inflation, dangerously low just a few months ago, is beginning to pick up and there are signs that the US has avoided a Japan-style deflation trap.

